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Spatial Pricing on Land Rental Markets

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  • Graubner, Marten
  • Balmann, Alfons

Abstract

This paper analyzes spatial competition on land rental markets. It contributes to the small body of literature that investigates the optimal spatial price policy under competition and extents previous work by considering economies of size. Because the consideration of increasing or decreasing returns of additional land and the endogenous choice of spatial pricing is analytically intractable, a computational economics approach is used to simulate spatial pricing in the presence of economies of size. This paper is a first step towards a spatial competition model of a land rental market and based on selected simulations it shows that price discrimination is likely to arise.

Suggested Citation

  • Graubner, Marten & Balmann, Alfons, 2012. "Spatial Pricing on Land Rental Markets," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 125349, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea12:125349
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    File URL: http://ageconsearch.umn.edu/record/125349/files/SpatialPricing_LandMarket.pdf
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    References listed on IDEAS

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    1. Marten Graubner & Ines Koller & Klaus Salhofer & Alfons Balmann, 2011. "Cooperative versus non-cooperative spatial competition for milk," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 38(1), pages 99-118, March.
    2. Greenhut, Melvin L & Norman, George, 1986. "Spatial Pricing with a General Cost Function; the Effects of Taxes on Imports," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(3), pages 761-776, October.
    3. Zhang, Mingxia & Sexton, Richard J, 2001. "FOB or Uniform Delivered Prices: Strategic Choice and Welfare Effects," Journal of Industrial Economics, Wiley Blackwell, vol. 49(2), pages 197-221, June.
    4. Catherine A. Durham & Richard J. Sexton & Joo Ho Song, 1996. "Spatial Competition, Uniform Pricing, and Transportation Efficiency in the California Processing Tomato Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 115-125.
    5. Panos Fousekis, 2011. "Free-on-board and uniform delivery pricing strategies in a mixed duopsony," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 38(1), pages 119-139, March.
    6. Silke Huettel & Anne Margarian, 2009. "Structural change in the West German agricultural sector," Agricultural Economics, International Association of Agricultural Economists, vol. 40(s1), pages 759-772, November.
    7. AM Alvarez & EG Fidalgo & RJ Sexton & M Zhang, 2000. "Oligopsony power with uniform spatial pricing: theory and application to milk processing in Spain," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 27(3), pages 347-364, September.
    8. Marten Graubner & Alfons Balmann & Richard J. Sexton, 2011. "Spatial Price Discrimination in Agricultural Product Procurement Markets: A Computational Economics Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(4), pages 949-967.
    9. Mérel Pierre R & Sexton Richard J., 2010. "Kinked-Demand Equilibria and Weak Duopoly in the Hotelling Model of Horizontal Differentiation," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-34, April.
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    Cited by:

    1. Hueth, Brent & Taylor, Christopher W., 2013. "Spatial Competition in Agricultural Markets: A Discrete-Choice Approach," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150506, Agricultural and Applied Economics Association.

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    Keywords

    Industrial Organization; Land Economics/Use;

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